Energy, Utilities & Mining

We have significant experience and are the market leader in Tanzania in advising clients operating in the mining, oil and gas as well as utilities sectors. For further detail on our experience in the energy and mining sector, refer to our capability statement below.

Energy and Mining Capability Statement February 2009

Industry Background - Mining

Tanzania is most well known for its deposits of gold, diamonds, rubies and (unique to Tanzania) tanzanite. However, it does also have deposits of other minerals including coal, copper, nickel, cobalt, gypsum, iron, lead, limestone, nickel, phosphate, tin, titanium, vanadium, uranium. For years the mining sector in Tanzania had been virtually dormant as a consequence of policies, which discouraged private investment in the sector. However, fiscal measures introduced in 1997 and a new Mining Act in 1998 triggered a resurgence of the sector. Foreign direct investment in the sector since 1998 is in excess of US$2.5 billion as a consequence of the development of several new large-scale gold mines with Barrick Gold and AnglogoldAshanti being the biggest investors in the sector. Having been an insignificant gold producer in the early 1990s, Tanzania is now the third largest gold producer in Africa after South Africa and Ghana with gold production now in excess of 50 tonnes per annum. By 2006 mining’s share of GDP had risen to 3.8% and gold alone comprised approximately 45% of the total value of exports of goods. Promising prospects for a number of minerals including nickel, platinum and uranium make diversification from gold more likely in the future.

Industry Background - Oil and Gas

Tanzania has excellent opportunities for oil and gas exploration and development in its mostly unexplored but highly potential sedimentary basins. The terms for potential investors are set out in the model Production Sharing Agreement (“PSA”) of 2004 and in the Petroleum (Exploration and Production) Act of 1980. PSAs are entered into with Tanzania Petroleum Development Corporation (“TPDC”), a public corporation. As of December 2007, there were 20 PSAs in place. Major gas discoveries have been made at Songo Songo and at Mnazi Bay, and in 2007 at Mkuranga. Natural gas produced from Songo Songo is now being used for electricity generation, and the field at Mnazi Bay is also being developed for electricity generation.

Industry Background - Utilities

The main supplier of energy is the Tanzania Electric Supply Company (TANESCO), a state owned company. TANESCO’s generation system consists of hydro and thermo (from oil and gas). The thermal power facilities are operated by private independent power projects, namely Independent Power Tanzania Ltd (“IPTL”) and Songas Limited (using gas from the Songo Songo). It is anticipated that a further gas to electricity project (the Mnazi Bay project run by Artumas) will come on stream in the future. TANESCO is also connected to the Uganda grid via Masaka through which it imports electricity into the Kagera region in North Western Tanzania. TANESCO is also connected to the Zambian grid which supplies power to the Mbeya Region. Water is supplied by various government-owned water authorities in the country. Each major town has its own water authority.